Establishing free trade across Europe

Much has changed since the agreement creating the European Economic Area (EEA) was signed in 1992, between the then 12 EU member states and the six countries of the European Free Trade Association (EFTA). The EEA agreement now governs the internal market between 27 EU member states and three EFTA countries – Iceland, Liechtenstein and Norway.

Several institutions had to be created to organise this complex relationship.

While the European Commission has powers to ensure that the EU member states comply with internal market regulation, the European Court of Justice (ECJ) decided that giving an EU institution powers over non-EU member states would be illegal under the EEA agreement. Hence, it was necessary to develop a two-pillar system of supervision for the two blocs. The EFTA Surveillance Authority (ESA) was established and given the same powers as the Commission has to ensure compliance with the four freedoms, the cornerstones of the internal market, and competition rules. The ESA does not, however, have any political role. Similarly, the EFTA Court was established, mirroring the ECJ (see below).

Per Sanderud, the president of ESA, says that the ESA’s main role is to ensure a level playing-field between the EU and non-EU members of the EEA.

“Our key responsibilities are, through the EEA agreement, to secure that EEA-EFTA countries have the same framework conditions as the EU member states within the internal market and to ensure that rules that apply to the EU member states also apply to the three EFTA countries that participate in the internal market,” Sanderud says. “We are not supposed to be stricter or nicer than the Commission.”

Transposing EU directives

Every year, the EEA-EFTA states transpose into national law 400-500 EU directives and regulations and it is the ESA’s responsibility to ensure that these are applied properly. If that does not happen the authority launches an investigation and possibly opens infringement procedures.

Although most investigations opened by the ESA concern member states’ failure to implement legislation, state-aid cases are the ones that receive most attention. Some of the recent big cases have focused on state aid to energy companies, a state monopole on gambling and the ownership of waterfalls and power stations.

We follow closely what the Commission does and in the big cases we have joint discussions before we make our final decisions

Even though the ESA does not automatically follow the European Commission’s decisions, Sanderud says that the two co-operate closely. “We follow closely what the Commission does all the time and in all big cases we hold discussions before we make our final decision,” he says.

Unpopular

But Sanderud, a Norwegian who heads the ESA’s college of three commissioners (one for each country) is well aware that, just like the European commissioners, he and his staff are not always popular back home, either with business or with politicians. “In Norway, ESA is a kind of a populist scapegoat and it is often described as ‘more Catholic than the pope’,” he says.

And the ESA, too, is subject to lobbying from national governments and businesses, Sanderud adds.

“ESA, like the Commission, is independent of the member states’ governments. They, of course, try to lobby us, just as private enterprises do, but it is all done in a proper way. On the other hand, we listen to good advice, whether it’s from national governments or anyone else,” he says.